Describe what your company does in 50 characters or less
Medbux is credit for HSA-eligible expenses
What is your company going to make? Please describe your product and what it does or will do. First, we’ll launch a credit card that gives financing opportunity and seamless expensing for HSA-eligible expenses. Alongside, we’ll launch an app which allows patients to track their purchases. They will be able to connect their health records and insurance details (which we will parse with LLMs) to receive lower custom financing rates and plans based on their history.
Over time, by tracking their medical needs and expenses, we can guide them towards preventative and supplementary measures that are provided by their insurance are being underutilized, or are not covered by insurance but are HSA-eligible.
Eventually, we’ll expand to other credit and financing opportunities (like buy now pay later, equity loans, etc) through tiered subscription of card + app.
Who writes code, or does other technical work on your product? Was any of it done by a non-founder? Please explain. We’re both technical and build product together. Ali has deep expertise in LLMs and AI, and Abhi is product and fullstack oriented.
How long have the founders known one another and how did you meet? Have any of the founders not met in person? We recently met on YC cofounder match. We haven’t had the chance to meet in-person yet but plan to soon.
How far along are you?
We recently uncovered this problem-solution fit, and since then validated it through research, conversations with family and friends, and set up a placeholder website.
We’ve generated a waitlist of 10.
How long have each of you been working on this? How much of that has been full-time? Please explain. We recently met on YC Cofounder Match, and have been working to validate this idea part time since then. We plan to go full-time the same time we launch our MVP (Jan 2024).
How many active users or customers do you have? How many are paying? Who is paying you the most, and how much do they pay you?
Currently, we have a waitlist of about 10 family and friends who have High Deductible Health Plans (HDHP) and HSAs.
If you are applying with the same idea as a previous batch, did anything change? If you applied with a different idea, why did you pivot and what did you learn from the last idea?
Previously, we were exploring the pharma and insurance sectors at our respective times during our Cornell MBA and Stanford PhD, without finding a solid problem. We learnt that the first step of healthtech is to find a buyer with strong purchasing power and independent purchase-decision making ability.
We landed found the perfect intersection of problem, team, and timing once we uncovered HSAs as an adjacent space to insurance that meet all the criteria of our learnings.
Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making? I (Abhi) recently opened my first HSA and was asking around my friends and family to learn how it works - surprisingly found out how rudimentary and inflexible it is despite being a very useful asset class (pretax contributions, tax-free growth and distributions, rolls over annually). Very commonly, I heard (as was my own experience already) how they would be hit with a medical bill, and wished they had the option to finance it over a few months while their paychecks came through regularly, but because of the inflexibility, they had to pay out of HSAs, making the bills drastically more expensive.
I was equally surprised how many of my friends all recently opened their first HSAs because they recently turned 26 and were no longer on their family plans, but were young and healthy to not need rampantly expensive premiums.
When I met Ali, he had already been working on a “Amazon for HSA” idea alongside his Healthcare AI PhD at Stanford. Together, we realized we were the right team to take on this project between my product, business and operating background, Ali’s deep AI and technical expertise, and our shared healthcare industry experience (across H1 W20, Hippocratic AI, Intuitive).
****We realized this was not an isolated problem within just our friend group - $120B sits in HSA accounts, growing at 10% every year to $150B by 2025. Right now, there’s no easy way to attain credit capabilities (credit cards, buy now pay later, equity loans) for HSA-eligible expenses - it’s like as if we existed in a financial system before the 1800s. IRA also just announced an increase in annual limits for HSA accounts.
New HSA accounts are being opened and funded at an unprecedented rate, all while medical spend is at an all time high post-COVID. HSAs are a way to bring economic power back into consumer's hands, and this becomes crucial going into a recessionary market.
HSA users are fundamentally different from the average credit card user because of 3 reasons: - Users that have funded thousands of dollars into a pre-tax account are financially more responsible - HSA contributions generally occur regularly from paychecks, providing predictability in risk-profile - HSA accounts are collateralized assets that are currently not being utilized for loan and credit opportunities
Therefore, HSA users are much less likely to default on their payments, and deserve their own niche of credit products.
Also, these financing solutions need to be tied closely to a strong tech product to create moat - users will come for financing needs, but will stay for the elite product experience.
How do or will you make money? How much could you make? We’ll start with a standard processing fee on every transaction processed on our card, as well as from interest on payments. With an average of 10% that credit cards businesses earn on the total money they transact, based on an annual HSA distribution of $75B, our initial TAM is $7.5B.
We will expand to tiered credit cards with annual fees, other financing and credit offerings, and tiered SaaS subscription for the app later.
How do users find your product? How did you get the users you have now? If you run paid ads, what is your cost of acquisition? So far, we have organically generated interest within friends and family by speaking to them directly and realizing everyone shares the same pain points.
We haven’t tried any paid acquisition yet, but have noticed a few patterns that we will continue to explore: - Young working professionals age out of their parents’ insurance at 26 and are choosing HDHP plans - Graduating seniors and grad students entering the work force for the first time are choosing HDHP plans - These patients prefer newer medical solutions from the likes of OneMedical, Forward, Wally